Wednesday, July 25, 2012

The shares of Zynga Inc(NASDAQ:ZNGA) tumbled to another new
low in late hours on Wednesday with stock plunged a whopping 37% to $3.20 as
the game provider reported much lower than anticipated second quarter earnings
and revenue. If, that’s not enough, here is more surprise – The company trimmed
its earnings outlook.

The company which is popular for games like "CityVille"
and "FarmVille" said that it lost $22.8 million, or 3 cents a share in the latest quarter, reversing a
year ago profits of $1.4 million. On an adjusted basis, the company would have
earned a penny, well below analysts’ target of 5 cents a share. Revenue came in
at $332 million, up 19% year over year, while missing analysts’ estimates of $342.8
million.

Shares of ZNGA had been severe selling pressure since early
March and had lost about 45% as investors are concerned about the company’s
reducing users. The company generated its 100% revenue from games played on
Facebook’s platform. However, the recent suggest that more users have been
shifting their uses to mobile from desktop, which has left limited room for
ZNGA to grow.

The company went public in December, 2011 at an IPO price of
$10, the stock quickly jumped to new high of $15.91 by early March. Since then,
the stock never recovered and showed continuous selling pressure.

For the full year, the company now projects to earn 4-9
cents a share on revenue range of $1.15 billion-to-$1.23 billion, well below
from its prior forecast of 23-29 cents per share on revenue range of $1.43
billion-to-$1.5 billion.

Shares of Facebook Inc(NASDAQ:FB) too came under heavy
selling pressure in after hours and tumbled over 4.50% as the company’s ad business
is largely dependent on usage of desktop, while ZNGA’s earnings suggest that
users might have switched to mobile, which could affect Facebook’s upcoming
earnings due late Thursday July 26, 2012.